What is it?

The monthly revenue growth compares revenue from two consecutive months, while the average monthly gross growth rate calculates the average monthly growth over the past year.

How is it calculated?

The average monthly gross growth rate is calculated by subtracting the previous month’s revenue from the current month's revenue, then dividing by the previous month's revenue. This is done for each of the 11 months in the past year. The sum of these monthly growth rates is divided by 11 to find the average. We use 11 months because, in a 12 months, there are 11 month-to-month growth comparisons.

What does it tell me about my company?

Monthly revenue growth gives a clear view on your business's performance and helps identify short-term opportunities and risks. Here’s what it reveals:

1. Growth trend: a positive growth rate signals expansion, driven by more customers, higher sales, or improved pricing. This suggests demand for your product or service and sustainable growth. A flat or declining trend may indicate stagnation or decreasing market interest, requiring a strategy reassessment.
2. Strategy effectiveness: if you introduced new initiatives – like marketing campaigns or pricing adjustments – monthly revenue growth can show how these work. A growth spike post-initiative confirms success, while a decline might signal ineffective strategies or emerging issues, such as customer churn or market saturation.
3. Revenue stability: tracking revenue growth reveals the predictability and reliability of your income streams. Consistent growth indicates stable revenue, improving cash flow management and forecasting. Erratic growth suggests volatility, possibly due to seasonality, promotions, or market changes.
4. Cash flow and financial health: revenue growth impacts cash flow directly. Positive growth means more cash to reinvest, reduce debt, or navigate downturns. A decline or stagnation could strain cash flow, especially with high fixed costs, making careful management essential to avoid financial trouble.
5. Competitive positioning: comparing your monthly revenue growth with competitors or industry benchmarks gives insight into your market standing. Outpacing competitors shows a competitive edge; slower growth highlights areas where others may be excelling.

What are the underlying data sources?

The monthly revenue growth is based on revenue and customer data.